Law Firm Tycko & Zavareei Investigating Banks for Improper Overdraft Fees

Boston, MAIf you thought you were safe from excessive bank overdraft fees and fee-increasing tactics because you keep your money with a regional bank, you might be in for a surprise. According to at least one law firm, smaller banks are also being investigated for improperly charging excessive overdraft fees. Jeffrey Kaliel, of the law firm Tycko & Zavareei, says customers should be compensated if they were improperly charged excessive banking overdraft fees.

The issue is not about people whose accounts were legitimately overdrawn. Rather, the issue involves people whose accounts were pushed into overdraft by questionable bank practices.

For example, some banks are accused of reordering transactions to push customers into overdraft more quickly than they should have been. Regardless of the order that transactions occurred in a single day, banks are accused of reordering transactions so the transaction involving the most money is processed first, forcing customers into overdraft far too quickly.

Rather than having one overdraft transaction, for a total fee of $35, they may have multiple overdraft transactions, at a cost of $35 per overdraft transaction. The practice of reordering transactions is designed to maximize profits for the banks, which reportedly made billions of dollars off fees in 2009.

Another practice that has been called into question is the practice of holding deposits to accounts. A customer could deposit a check to his account and then make some purchases, believing he had the money in his account to cover those purchases. Unfortunately, he might find out after the fact that the bank held his check for a few days, and every transaction he made until the hold was lifted pushed his account further into overdraft, once again increasing the number of overdraft fees he was charged.

Making the situation worse, some customers say they cannot predict when the funds will be released into their account because some banks release the funds inconsistently.

"We are continuing to investigate many banks including American Savings Bank, Mountain West Bank, Sandy Springs Banks and other smaller banks around the country. Customers must be compensated for bank practices that caused hundreds of millions of dollars in improperly charged fees," Kaliel says.